Luis Alvarez Talks About Silk Road, The Creation of Ross William Ulbricht

A couple of weeks ago. The FBI shut down a cyberspace black market site with the really cool name of Silk Road. Think of it as the Amazon.com for illegal products, from crack cocaine to hacker tools (tailored viruses and Trojan spyware), to counterfeit money ($100 US counterfeit bills for $25 US each) to falsified documents (passports = $2000, US Citizenship papers = $10,000). The Silk Road was considered to be the largest most profitable of the numerous black market sites that exist in cyberspace, raking in upwards of $1.2 billion. Rather than using cash or credit cards, however, all transactions were conducted using bitcoins, an artificial cyber currency which has real value that is traded on public markets.

Silk Road was the creation of Ross William Ulbricht, a 29 year old American former physics and engineering student who publicly espoused free-market, libertarian economic ideals who railed against the government. (Side note: This guy eerily fits a profile that also include Julian Assange and Eric Snowden, which makes me wonder if we are getting a peek into a generational shift in thinking about markets and government that could have some really scary consequences!) The intriguing thing about Silk Road is that it existed in a part of the Internet known as the Dark Web, that is, a part of the Internet that is hidden from most people and that you can only access using sophisticated tools that reveal its precense only to those in the know.

The primary way of gaining access to the Dark Web – and to sits like Silk Road – is to use software that uses TOR (The Onion Router (really!)), a very secure, encrypted series of cyber-tunnels that rides over the traditional Internet backbone unbeknownst to the public at large. It would be like living in a suburban neighborhood with thousands of houses and, hiding amongst the sedate, cookie-cutter homes, there are dozens of meth labs operating but only the operators of those labs know they exist.

TOR and similar schemes that bypass the traditional way of doing business on the internet represents a challenge to law enforcement but the fact they took down Silk Road and got Mr. Ulbricht into custody tells you that they are starting to pay attention.